Sunday, 22 December 2024
UnionPay bars Chinese buyers from swiping for Hong Kong property
UnionPay, China’s biggest interbank payments platform, has barred Chinese customers from using its transaction system to shop for property in Hong Kong, in the latest show of tightening capital controls on the mainland.
Any card with the UnionPay logo issued on the mainland will no longer be usable for registration payment for Hong Kong apartments, according to several agents.
“We received guidance that holders of China-issued UnionPay cards can’t buy properties in Hong Kong,” said Sammy Po, head of the residential department at Midland Realty International, a leading property agent.
As much as US$728 billion worth of capital left China as of November 2016, according to the French bank Natixis’ Capital Flow Tracker data, with US$246 billion in outflows in the third quarter. Much of that money had found its way to the city property market.
UnionPay, the dominant payments system for Chinese banks, is a popular means for mainland customers to put down registration fees on property, usually HK$100,000.
Chinese funds had been flooding into Hong Kong’s property market in the past year, as concerns about a deteriorating yuan spurred many residents and companies to park their cash in overseas assets as a hedge against currency losses.
The Cullinan West, one of the latest apartment projects to go on sale this month, is estimated to have sold 10 per cent of its units to mainland buyers.
“Recently, we have carried out investigations on large-sum, suspicious, cross-border UnionPay card transactions and reiterated to cooperating institutions the requirement to strengthen merchant supervision,” UnionPay said in a statement.
According to the UnionPay regulations for managing acceptance, it is strictly prohibited to use a UnionPay card issued in Mainland China for cross-border acquisitions of property. This regulation remains unchanged.
The latest move by UnionPay follows a ban it imposed last October, preventing customers from using its service to buy investment-related insurance products in Hong Kong.
The Chinese central bank followed that restriction in November with an order for the country’s commercial banks to stop issuing credit cards that allow customers to transact purchases in dual currencies. Credit cards issued in China with Visa or MasterCard must be replaced with those issued by UnionPay when they expire, according to a report in the People’s Daily newspaper.
“Property transactions by non-Hong Kong residents stands at around 1 per cent of the total, since the introduction of Double Stamp Duty (in 2013),” Financial Secretary Paul Chan Mo-Po said on the sidelines of the Boao Forum, declining to comment specifically on UnionPay’s ban.
With home prices continuing to hit new highs, Hong Kong has held on to its dubious title as the world’s least affordable urban centre to buy a home for the seventh year running.
The city’s apartments cost about 18 times the gross annual median income.
Still, the latest ban on UnionPay transactions was not likely to hurt market sentiment, Po said.
“There are still other ways for mainlanders, such as using Visa cards or just bringing in cash,” he said.
Re-disseminated by The Asian Banker from South China Morning Post
